Dell is one of the companies that is using JIT and not only is it using it for the sake of using it but is using it very efficiently. The just-in-time system that Dell uses promotes customers to give orders directly to them and they make what the customer wants and when they would like it. By this process raw material in stock is seen to decline and inter-reliant distribution also increases productivity. This paved the way to the appliance of the pull approach in the supply chain. This pull strategy gives Dell an edge over its competitors.
Because of the efficiencies generated by using the JIT system Dell need not keep 20-30 days of raw material in its storehouse but it just needs to keep about 5 days worth of raw material with them. We can see a win-win situation for both the customers and the company. By integrating the integral system a closer bond is established between both parties. As it is know the price of technologies does down in no time so having the JIT system which minimize keeping inventory came as a blessing to Dell.
Now they can give their customers the new and improved of everything instead
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Dell uses “internet-based applications” to link to its suppliers. As soon as an order is placed the raw material needed are transferred to the suppliers and then Dell receive the verification that their order has been placed and whether they can provide the company with the raw material or not. The material asked to ship is only that that is needed to make the required order and then the vendor will supply the raw material to the “assembly line” so that further work can be done to attain the end product that is computers.
Dell uses the JIT concept so efficiently by integrating the entire system to it. The amount of supplies it orders is only sufficient to last the production of 2 hours and after that they re order! With the implemented system, Dell can respond to non-routine situation very efficiently. Example#5: Another example of a company using just in time inventory system is McDonald’s. McDonald’s doesn’t start preparing the burgers until and unless it got an order to do so.
Previously in the manual system McDonald’s would cook the hamburgers and place them beneath heating lamps. The burgers were stored as long as they could be and when they couldn’t be sold off they are trashed. But since the application of the JIT system the wastage for the company has decreased and the customers get freshly made burgers, which in turns delights them. The sophisticated hamburgers making machinery like bun toaster make the processing time of the food minimum.
With the new system McDonald has less burgers as raw material and gives the customer quick service and make it truly a fast food restaurant. Due to the new implemented system the cost is seen to decrease whereas the quality of the food is increased. So the JIT system had turned the “burger assembly” into an efficient system that has reduced the ordering cost for the company. McDonald has a record time within which the burgers are made so it need not worry about having low amount of inventory on stock.
Previously McDonald had a high holding cost because the burgers become spoil very quickly and then cant be used but because of the JIT inventory system the holding cost is seem to take a slump. So now the fast food joint doesn’t have to charge their customers with high cost because now it won’t incur high spoilage cost and this in turn won’t be transferred on the customers. Previously McDonald carried high inventory because they wanted to have food when the customer demanded for it whereas now it carries less inventory but has made radical changes to the way things are done.